if we had otherwise sold those as fixed rate bonds which is the bar chart on the right the average for fix rate bond was 4%. so the difference between the two numbers is what the airport has saved since the implementation of swaps. in fact, since we implemented swap to date the airport has saved $100 million by using these financial instruments. and we expect to save at least another $100 million using this financial instrument out to the termination of the swap which is in about 2029. so they've been a very effective tool. they've been functioning as planned and designed and we are happy to have them in place. >> supervisor avalos: these rates that you have for the fixed rates, at 4.09% is that the current rate? >> that's actually an average of long-term fixed rates kind of across the board. that's what the municipal finance people use as benchmarks

to understand how you're performing against how others are performing. >> supervisor avalos: and this 3.6% is that what the maximum could be for variable rate? is that -- >> correct. >> supervisor avalos: do you know where we're at in terms of where we're at on the average? >> that is the actual rate of all of our swaps blended together. we will never go above that rate. even if interest rates raised to 6% the airport will never pay more than 3.69. so it's a very good tool. >> supervisor avalos: how does this compare to other swraps that -- >> well, it depends on when different entities enter into swaps. the the market is always changing. in general we're very pleased with these interest rates that we locked into because when we entered into these interest rates, you know, back in 2007, long-term fixed rates were actually much higher then, they were in the 5 to 6% range so the fact that we could lock in at

3.5 or 3.6 we were very pleased to do that. you could probably, in today's market, probably couldn't get this kind of rate today. so we feel we've done well. again, we've saved $100 million to date and there's a lot of savings coming in the future with the use of these tools. >> supervisor avalos: do you think this might be a question for the city attorney but do you think because there has been manipulation of the market that we would have some leverage to be able to renegotiate our interest rates for swaps? >> well, like most agreements, these agreements are long-term. and when we entered into these agreements, they were for 30 years. there's really no -- in terms of today, there's no legal reason -- we don't have any legal leverage to actually renegotiate these rates. the only way that would happen is that if these swap providers actually got a credit downgrade. we would have the ability to

terminate the swap in our favor. but in terms of negotiating a lower rate than the 3.69, i hadn't heard -- i haven't heard a swap being negotiated free willing today. >> supervisor avalos: who are the major swap providers? >> j.p. bore gan, bair sterns which merged with j.p. morgan. i have it all here. so our swap providers are j.p. morgan, merrill, and goldman. >> supervisor avalos: how many of those were part of libor manipulation? >> if i were the chart it was j.p. morgan, just one. >> supervisor avalos: do you know how our airport swaps differ from the h&r museum swaps? >> i don't know the nature of

the asian museum swap. that's all the information i have. thank you. >> good afternoon. jay hugy from the san francisco retirement system. retirement system staff and our consultants have been evaluating the potential libor related losses in the portfolio since the city of bawlt more filed its suit in the summer of 2012. we initiated this investigation or the evaluation pursuant to the retirement board's securities litigation policy which it adopted in 2005, and is an ongoing policy where we have consultants and staff routinely monitor securities litigation related to any potential holdings that we would have in the trust. the scope of our evaluation included all of our assets, all of our holdings that would have any kind of index to libor

including but not limited to investment rate swaps. for the time period august 2007 through february 2009 and this was the time period that was put forth in the city o baltimore lawsuit. we had exposure. the trust had exposure in its real estate portfolio as well as in its fixed income portfolio. generally speaking we would benefit from artificially low libor rates in our real estate portfolio and be disadvantaged with artificially low libor rates in our income portfolio. the result of our evaluation is that we -- during the period had interest rate swaps in place. currently we have no interest rate swaps in our portfolio. the scope of our interest rate

swaps were as high as 41 million, as low as 3 million and now we currently have no interest rate swaps in our portfolio. what we've estimated its for every 10 basis points based on our overall holdings if there is settlement we might be required to pay back some of the excess interest -- or pay back the benefit that we got, as well as collect our losses. but what we have determined from our analysis is, from a thet standpoint, for every 10 basis points we assume potentially 200,000 worth of losses, net losses to the fund, during this period of time. and i'd be happy to answer any questions that you might have. >> supervisor avalos: just wondering how you went about estimating the timeframe for the libor manipulation and what the magnitude is, like what is the process?

>> since it was city of baltimore litigation that triggered our evaluation, it was set in the city of baltimore which was august, 2007, through february 2009. we looked at it again in relation to the city of san mateo county and san diego county filing and extending that period in early 2011, and our analysis based on net positions in our real estate and fixed income really was not significantly different for that extended period. >> supervisor avalos: so do you think it's possible for the city, and this can be a city attorney question, to pursue losses that we've had regardless of what any gains we may have had in -- due to libor manipulation? >> i would suggest that it's the retirement board's determination pursue. they feel very strongly we should pursue any losses that would accrue to the detriment of

the plan÷hñ?ñ?ñ?ñ beneficiaries. like i said, through thercñ?ñ? n brothers settlement, we were in fact required to pay money back that, because of mñ?ñ?ñ? the manipulation, we were not entitled to.veñ?ñ?ñ?ñ? and in exchange, we received money wherenlñ?ñ?ñ?ñ we lost. so i'm not saying or suggesting? that this would necessarily be the the case, but weliñ?ñ?ñ?ñ? e that circumstance under which the retirement system,ñ?ñ?ñ?ñ hg holdings on both sides, which would have benefitedñ?ñ?ñ? or bn disadvantaged, were required to -- on]jñ?ñ?ñ? the settlement, pay both sides. >> supervisor avalos: does the pursue recovery of losses? >> we are confident -- and part of our evaluation is all of the holdings that we had during this period, from 2007 through 2011 are covered in the class of securities that are the subject of all the litigation and we know, and we have in the past, and we reteenly participate as a

member of the class to recover our claims. so the retirement board has shown no interest in initiating a lawsuit, per say, as a retirement board, knowing that we will be able to participate to our full extent of our holdings, again any kind of recovery and claims recovery. >> supervisor avalos: thank you. >> thank you. >> good afternoon, supervisors. gregg coto from the san francisco treasurer's office. i'm here to talk about the city and county of san francisco treasurer's pool fund portfolio and to give you context over the period of time from 2007 up 'til present, the actual size of the portfolio has ranged from $3 billion to $6 billion. during the time that we've been talking about with the manipulation from it 2007 through 2011, the treasurer's

pool fund did have investments in securities that had interest rates that were based on the libor rate and that was roughly about 5% of our portfolio. and none of these investments experienced any principle losses. our analysis does show that due to an active trading strategy our portfolio yield and our earnings were not materially or significantly impacted by the libor manipulation. >> supervisor avalos: what does that mean in terms of dollars, not materially impacted? >> less than three basis points. less than 3/100 of 1% and we're making over 1% on our portfolio this year. >> supervisor avalos: what would that be in dollars. >> the three basis points i referred to would be under 1 million dollars at the most. >> supervisor avalos: okay.

we have investments in commercial paper linked to libor to the treasurer's office? >> that's -- we were -- those libor based investments were the ones i was discussing. i don't believe they're commercial paper. we don't hold very much commercial paper at all. >> supervisor avalos: in terms of what your review has been, what you looked at, your research, is it possible to share that publicly or is that something that's closed? is it possible to share the copies of documents that you reviewed for looking into the extent and magnitude of the scandal, and its impact on san francisco? is that something that's available to the public? >> i can certainly see -- i mean we didn't necessarily have documents. we looked at what our positions were. one of the things about this, why we weren't impacted is we are not an issuer like the airport or the office of finance. so what we do is buy the

securities that might be based on this interest rate. so because we're active traders, if the interest rate was high, we traded on that. if the interest rate was low, we traded on that because we went into the market every day and picked the best investment for the city. so that's why -- i can certainly provide you what information we have. but what we just did was look back at that period and saw what that impact might have been. >> supervisor avalos: okay. we could follow up on that if the future if we need to. thank you. >> good afternoon, supervisors. deputy city attorney tom lock rits. as the three departments have talked about, we've been looking at the potential impact of the libor manipulation on the city

finances. we've been monitoring the ongoing litigation, and trying to work with the departments and determine what is the best avenue for the city to pursue. and we haven't made that decision yet. and i think that supervisor avalos had a few questions for the city attorney's office along the way. i've remembered a few of them but not all of them. i'm not aware of any settlements where any investors have obtained any funds or recovered any funds. the settlement with the department of justice, with bar clay was with the criminal division of the department of justice. i don't -- it's been a while

since i looked at the document. i don't recall whether there were convictions. but it was a settlement. and i apologize. i forgot the other questions but i'm happy to answer them. >> supervisor avalos: let me add a couple other questions. what's the city's position right now on joining any class action lawsuits? >> well, as you mentioned, at the opening, there was a significant data point in the litigation on friday, which was a dismissal of a number of the claims that were brought. >> supervisor avalos: the city of baltimore? >> the city of baltimore and other claims as well, that were consolidated into the same court. >> supervisor avalos: i think what was thrown out was a portion of the claims that were about that there was -- the antitrust claims that were brought forward, and the judge

had said that she did not believe that there was an effort to limit -- eliminate competition. and do you feel that her opinion is a strong one, that would hold up if there was any kind of an appeal? were you able to review her opinion? >> i have not -- i have it here -- >> supervisor avalos: 165 pages. >> i got it on monday and i was out of the office yesterday. so i haven't fully digested it yet. that's one of the data points that we're looking at. we're also looking at the suit that you mentioned that was filed by the counties of san mateo and san diego. so we're trying to decide -- there are a number of avenues that the city could pursue, to seek restitution, or recovery of any losses. >> supervisor avalos: and then i'm trying to understand if we have a statute of limitations

under federal security clause, or like a five year statute of limitation? >> it depends on the type of claim. and that was one of the significant issues that was addressed in the court's opinion on friday, as what is the applicable statute of limitations, and when did the plaintiff have notice, and so that is also something that we are taking a look at. >> supervisor avalos: so i guess i have a concern that if, as a city, we take a wait and see approach, as we're seeing the statute of limitations, you know, the beginning of the manipulation, we see in the distance, does that limit our ability to recover from the earliest points of manipulation? if we wait and see, and there's time passes, and we see the beginning of the manipulation we

won't be able to recover any losses if it happened earlier. >> it depends on the financial instruments that we're talking about and whether or not they are covered by an existing class suit. >> supervisor avalos: and so could you say how that might vary from financial instrument to financial instrument? >> i would have to be -- i would have to go back to the client and figure out which instruments we're talking about exactly and figure out what the overlay is with the existing litigation. >> supervisor avalos: so do you know when you'll -- are you planning on looking into the baltimore case and the dismissal of the antitrust aspect of the claims? >> yes. >> supervisor avalos: is that something we can talk about off line, talk about it off line in the future?

>> sure. i'm happy to report back where we are with the analysis of that decision, and how that case is going to move forward. >> supervisor avalos: okay. >> anything else? >> supervisor avalos: thank you. no questions from the committee. so thank you. are there other presenters that are part of the city presentation? okay. i want to thank the city staff for presenting their work on their research and analysis of the impact on the city. clearly, based on what's been presented to us, the statements made by the city that we are not majorly impacted by this -- by the libor manipulation, however there is an impact to the city and i think where there is an impact, really we have an obligation, either to our funds

in our different departments like the airport, or to our retirement system beneficiaries that we actually pursue what we can in terms of recovery of losses, despite the difference. i also think that the city of san francisco, being a major city, major financial player in the municipal finance industry that we actually have an obligation as well to stand with other municipalities to make sure that we are supporting their efforts in any recovery as well. i will have more comments after. want to go to public comment on the issue as well. uposo i have a number of cards o call for public comment. and folks hear their names called, they can come up in the order they're called.

bahar taloo, -- yarborough, elizabeth a alexander, jesse mitchell and -- >> good afternoon. my name is with sciu, about the fraud, what it cost our communities and what we can do about it. i'm not sure i can get through it in the three minutes but i would like to follow up issues specifically on the other kinds of predatory deals. you have heard today about how the biggest banks rigged interest rates on the world interest rate to increase profits. it's the biggest financial scandal in history. up to 800 trillion of financial securities, derivatives and loans are tied to it, with the counties and their pension funds. banks have admitted guilty and agreed to pay more than 3 1/2

billion. we need to get that money back. so you've heard that across the country there are already about two dozen lawsuits by cities, counties, pension funds that have taken action to recover their losses and without netting out their losses against any gains and doing it for the maximum period of 45 months, not the 18 months discussed earlier. finally today you have heard from staff that libor fraud has cost the city millions in losses at sfo, the pension fund, as our elected officials, the the board of supervisors has the legal, moral and financial obligation to protect the city's resources. we urge you not to take a wait and see approach but rather take proactive and aggressive action to get that money back for san francisco. the facts are strong and unchanged even in light of the federal ruling last week. while the judge dismissed some claims like antitrust, other legal avenues to recover losses

remain open. we can monitor the progress of the federal class academies lawsuits, but if -- action lawsuits but if we sit on the sidelines we will lose the able to recover our losses. we need to look at our options under state and federal law and do it quickly. every day we wait, every day we could be losing ability to recoup these losses because of the statute of limitations runs out on some of these claims and a number of class action lawsuits don't actually cover state based claims open to us so the idea of waiting to see what happens with other suits don't cover the full extent of san francisco's losses. finally, we need to call on our attorney general to explore the possibility of prosecution and investigation of the banks under state law. we need to aggressively advocate for getting back every penny using all legal avenues and we know all public entities have

suffered losses so we urge you to call on your counterports at school districts, public utilities and their pension funds to take similar action. once we add up the damages we are looking at hundreds of millions of losses to san francisco and millions more in damages to bay area taxpayers. >> supervisor avalos: just a question. could you say -- talk about are any attorney generals around the nation taking up -- playing an active role in helping municipalities and counties recover from the losses? >> a number of attorney generals across the country have active investigations. and that's what we have heard so far. so i don't think publicly there's been any fines or any lawsuits filed. but they are in the stage of investigating to i think decide the way forward. and i think cities calling on them to be more aggressive and to jump in, given that there are some time limits would be

helpful. >> supervisor avalos: in california do we see a strong action from our city attorney general? >> what we have seen is that they're investigating the issue. >> supervisor avalos: okay. anything else to add? >> i'd like to talk about the other kinds of deals. what we know is that libor fraud is just the tip of the iceberg. we're learning every day of illegal and unethical practices by these banks who peddle high cost risky deals to entities just the way they peddled high cost loans to unsuspecting homeowners which is labeled as predatory loans. finance industry has been peddling similar kinds of deals to public entities pushing public predatory financing through deceptive and fraudulent practices and taxpayers are paying the price. like gouging on fees and interest rates an example is the san francisco airport interest rate swap that actually has cost san francisco taxpayers $100 million since 2008.

those deals have in fact blown up. and to add to your point, supervisor earlier, the municipal finance market is today $3.7 trillion business. it is to fund central service, but instead we pay billions every year to the biggest banks while communities are forced to sacrifice and accept cuts to services and education. wall street gets a free pass and those least able to afford it have to fix the problem. we have to figure out the full extent on losses on libor fraud and recover that money and the beginning of a thorough review of in he bad deals that should be renegotiated that could save san francisco taxpayers millions every year, and the willingness to renegotiate to ensure the predatory practices, whether illegal or unethical are put to a stop for good. >> supervisor avalos: thank you. what you stated in terms of the airport losses, in their swap is

much higher than what the airport has said. what do you see as the difference? where does the difference come from? >> the way we look at it. we look at the swap contract that exists now. this deal was made to actually save the city money. as the staff said it was a hedge on variable rate bonds intended to save money. it was never supposed to be costing us money and has now cost us $16 million a year. i think the way staff was describing it was looking at having the swap and the variable rate bond compared to having a fixed rate. we're not looking at that. we're saying looking at the contract that exists now, this is a contract where we made this deal because we thought it made sense. what happened was we agreed to lock in a fixed rate of about 3.4, to 3.9%. and then in the swap the banks would pay us back their variable rate at the time.

this deal was made before the financial crisis so at the time, you know, we're paying about 3, 4 percent, around they were paying us back around the the same amount. now after 2008 when the fed cut rates to zero to bail out the banks the variable rate was dropped down to nearly zero. so since 2008 we are still locked in, the san francisco city is still locked in to about 3.4 to 3.9% and the banks pay 0.4%, almost zero. the difference between that spread is $16 million a year. since 2008. and over the past -- if you look at the past five years that's almost $100 million. and we can't get out of these deals because there's a penalty to get out. what we're advocating is we should call on the banks to renegotiate this existing deal. we're not saying we should cancel a contract or refinance into a fix, but work with the banks to say we should lower the rate that the city's locked into because it is out of whack with

the reality. these deals were based on expected rates, when we made this deal, precrisis. they don't make sense. they have done so in other places, as we said the asian art museum, there's actually an article that we can pass out that describes that there was in fact a renegotiation of the swap. we know that the banks have renegotiated in the city of richmond so we know that banks can and do renegotiate these deals, when we work to try to make that happen. and there's no reason why we shouldn't try, even if we can save 1% that is significant money for san francisco taxpayers. >> supervisor avalos: thank you. >> thank you. >> supervisor avalos: next speaker please. >> my name is neilly yar borrow, a member of district 10. i am here to call on the board of supervisors and city staff to recuperate the money that the banks took from us through libor. that money blonks to san francisco and we need to get

that money back. whether it's five cents or 5 million, we want our money back. the banks manipulated the interest rates to profit themselves at the expense of us. they rigged the system and thought they could get away with it, just like the banks sold homebuyers predatory mortgages that cost families their homes now we found they did the same to us and our government as well. all of us here in san francisco work hard every day, and the taxes that we pay from our hard-earned money need to go to services for our communities. as our elected representatives, you have the legal and financial and moral responsibility to protect our city's resources, whether it's five cents or five million, we want our money back. now more than 20 lawsuits around the country have been filed, including at least nine public entities in